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Land Partnership Handbook

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Expert guidance on forging relationships between aspiring farmers and existing landowners

Expert guidance on forging relationships between aspiring farmers and existing landowners

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Land Partnership Handbook Land Partnership Handbook Document Transcript

  • The Land Partnerships Handbook A new approach - using landto unlock business innovation
  • The Land Partnerships Handbook The Land Partnerships HandbookThe Land Partnerships Handbook A new approach, using land to unlock business innovationContents Foreword Land is our most precious resource. Land supplies our food, water and energy. It supplies the raw materials ways of thinking about old problems, new opportunities for creating sustainable businesses. And to think about the long for countless rural businesses and so term as well as our immediate needs.04 What is the Land Partnerships Approach?  supports the local economy. It offers landscapes of outstanding beauty This handbook sets out practical and06 Step 1 Taking stock and unforgettable experiences. It is a constructive ways to build and strengthen haven for nature. the relationships that will make this08 Step 2 Finding the right match happen. It aims to unlock the potential But land is also a scarce resource of land and of budding entrepreneurs, to Dame Fiona Reynolds DBE and one under increasing pressure from encourage us to explore new forms of10 Step 3 Creating a balanced agreement Director-General the demands of a growing population. land tenure – and to use existing models National Trust We need smart land management more imaginatively. It is both practical12 Step 4 Selecting a legal framework that balances social, environmental and guide and thought provoker. Above all, it economic needs – now and in the future. is far sighted in seeking to address one of18 Step 5 Thinking long-term 15 That demands a new approach. This Land Partnerships Handbook sets out the biggest challenges facing us all. that approach. Ultimately our success in managing our CASE STUDIES 16 Good land management depends on partnership – between landlords and land will be judged by future generations. Our responsibility is to do everything we can to ensure that we hand on land that 05 FarmStep project in Oxfordshire tenants, producers and consumers, meets their needs as well as it has met owners and communities. To manage our our own. This will be not be a simple 07 Dartington Hall Estate land in a balanced and sustainable way, task. But by working as partners to meet we need to harness the enthusiasm and social, environmental and economic 09 HerePigPig creativity of all those groups, working needs, now and for the long term future, 15 FutureFarms together. We need fresh ideas, new we stand a chance of doing that. 16 Clinton Devon Estate 19 The StoryAcknowledgements 19 Why this is My long standing concern has been how we maintain a diverse This issue was recognised by representatives from across theThe Land Partnerships Handbook is itself the product of strong needed now and thriving farming industry for the future. It is now clear that we are industry at the Fresh Start National Farming Ladder Seminar in 2011.partnership. The project was conceived by LandShare CIC and the missing a crucial factor in ensuring Now this timely handbook hasDartington Hall Trust. The handbook was written by Tom Curtis of this as we go forward. This is the grasped the challenge. It is a majorLandShare CIC and David Riddle of LandWise Rural Resource ability for ambitious and innovative step forward; without preachingManagement, with legal advice from Mark Charter of Blake Lapthorn new farmers to gain a foothold and radical change it points to how aSolicitors. Alison Rickett of Fresh Start coordinated the production of the get on up the farming ladder. fresh, collaborative approach betweendocument, and the National Trust helped with print and production. Heidi landowners and ‘land entrepreneurs’Proven of Landshare.net organised web resources. Rachel Harries of the There are many reasons for this, can unlock new potential.Soil Association, James Copeman of James Copeman & Co and John Lord Donald Curry but key is the sharp decline inChannon of Dartington gave active support through the project steering of Kirkharle medium size holdings, from 32,000 I urge you to read on. The partnershipgroup. Funding was very kindly provided by The Ernest Cook Trust, Holly KB CBE FRAgS to 18,000 in the past 20 years. This behind this handbook demonstratesHill Trust, Dartington Hall Trust, and Blake Lapthorn Solicitors. We are also means the barriers to entry are high, how we as an industry can workgrateful for all the case studies and endorsements other organisations and the opportunities limited, and we are together to capture the talent andbusinesses have contributed throughout the document. All contact details in danger of having a closed shop. passion of our future farmers.can be found on www.LandPartnerships.org02 03
  • The Land Partnerships HandbookWhat is the Land Our approach This handbook is structured around aPartnerships approach? five-step process, which is designed to address both the technical and the relationship-building aspects of creating a strong business to business arrangement. Each step emphasises a critical element of the approach, asBuilding on the long heritage of land Who might be interested? described in the diagram below.tenure, the emphasis is on creating Landowners Step 1: Taking stocksound business relationships. n L  ate career farmers, thinking about succession, planning to Making a clear assessment of the assets you have at your disposal, and what you would like to achieveT wind down from some of the with them his handbook describes a new The conventional, and perfectly practical aspects of running a approach to help landowners legitimate, way to let land is for a farm, or to pass on experience to parcel out land and buildings on landowner to advertise a tenancy a new generation which ‘land entrepreneurs’ can opportunity with a ready-made draft n  ew landowners, who want Nestablish new, independent businesses. agreement. Prospective tenants compete to see their land used practically CASE STUDY Step 2: FindingThe approach places strong emphasis on for selection through a tendering process. and gainfully, but who are not the right matchthe process of forming and maintainingsound business-to-business relationships. The Land Partnerships approach will tend to differ in terms of ethos and process: in a position to farm the land themselves Camilla and Roly, and the Getting the right combination of land, n  ctive farmers, with land, A FarmStep project in Oxfordshire people, skills, and objectivesLegal agreements are an important n T  he ethos of Land Partnerships is who wish to diversify theirpart of this process but they are seen essentially reciprocal, with both parties business without the risks and Camilla and Roly both grew up on farms, and both have had successfulas a follow-on to the formulation of a taking the initiative to find each other complexities involved with agricultural careers working for FWAG and LEAF. Their dream was to setgood business deal. We show how you and to shape the nature of the establishing and running several up their own sheep farm – something to which they could bring significant Step 3: Creating acan use a spectrum of legal models to business deal itself. The result is likely businesses at once practical and people skills, and a thorough knowledge of the sector. balanced agreementcreate effective Land Partnerships, to be more balanced, and more stable. n  state owners or managers who E Crucially, they also had an upbeat attitude and lots of energy. The onlyaccording to the nature and needs of have identified a gap in their thing they were lacking was land. Working out how to share the risks andthe businesses involved. n T  he details of what is on offer from the estate system The Earth Trust is a land owning charity with 1,500 hectares of mixed rewards of new land enterprises landowner and what is expected from n  and owning trusts or charities L arable and grazing land, south of Oxford. The Trust was keen to diversifyThe approach is primarily aimed at setting the land entrepreneur will be less fixed. wishing to find cost-effective its farm business holding, partly to broaden the base of its income andup new lettings or contracts but it can This leaves the process open to novel ways of achieving their social or partly to create a buzz of active and engaging farm activities on its land,also be used for the creative review or proposals, and creates more potential environmental objectives with which to inspire public interest in food and farming. But establishing Step 4: Selectingre-negotiation of existing arrangements. for collaborative planning – coming up a cluster of in-house businesses would have been complicated and with ideas and solutions together. Land entrepreneurs expensive. So the decision was made to invite in innovation through a a legal frameworkWhat makes the n Y  oung farmers, with the scheme called FarmStep. Most of the required legal and businessapproach different? n D  eciding and agreeing the most training and experience to set up Camilla and Roly now run a sheep farm on the Trust’s estate. They structures exist already. This is aboutThere are already nearly 15,000 tenant suitable form of agreement will be a new farm business, but without have 400 ewes and produce lamb which is sold through local farmers’ using tried and tested tools to create novel outcomesfarmers in the UK, working on more than the end point of the process rather the land or capital markets. Roly says: “For us this is a lifelong ambition. The business isa third of our agricultural land. The Land than the starting point. n  xperienced farmworkers or land E ours, and the land is owned by the Trust. Setting up our sheep farm wouldPartnerships approach builds on a long managers, who have decided not have been possible if we had had to buy our own land, so this hasheritage of land tenure, from modern joint Why is this useful? to take the step up into running been an important opportunity for us.” Step 5: Thinking long-termventures and Farm Business Tenancies, The promise of a Land Partnerships their own business, but who do Being prepared for the inevitabilityback to medieval common rights. approach lies in the benefit it brings to not have the capital to buy land of change; creating options, n  eople with a related business P both parties. Encouraging land-own- improved risk management and new optimising resources, and building background, such as food retail ers and land entrepreneurs to combine ways of marketing, or it may simply business relationships that will standEncouraging landowners and land entrepreneurs to or horticulture, who are keen to resources to create new land enterprises involve the creation of a new business. the test of time branch out into the business of provides the owner with new ways tocombine resources to create new land enterprises land-based production diversify their operation. And it gives land We think that opening up this spaceprovides the owner with new ways to diversify their n  ommunities or groups of C entrepreneurs the chance to apply and for creative entrepreneurship is Potential land partners should use consumers who wish to set up develop their business skills without the important. In a world of growing the handbook as a stepping off point;operation. And it gives land entrepreneurs the chance or invest in a Community prohibitive cost of land purchase. needs and shrinking resources, we to scope what is involved, to helpto apply and develop their business skills Supported farm which will produce products on their behalf. The outcomes might include better use need to muster as many smart and fresh ideas as we can to make best explore options and to point towards sources of more detailed and specificwithout the prohibitive cost of land purchase. of assets, integration of enterprises, use of the land. n information and advice.04 05
  • The Land Partnerships HandbookStep 1: Taking stock CASE STUDY Addressing risk on the Dartington Hall EstateScrutinising your own motivations, in Devonassets and requirements will be time “For some years now, it has been ourwell spent. practice at Dartington Hall Estate to offer small parcels of land to rent forW innovative or experimental uses to local hether you are the 3. Discuss. What do your family, Land Partnerships groups or individuals. Sound business landowner or the land colleagues, land agent and other are not restricted to planning is essential, as it is fair to say farming. Enterprises entrepreneur, the Land professional advisers think? that the more innovative a proposal is, at Dartington include Partnerships approach has the development of a the higher the risk to both parties is likelyto result in a viable and realistic 4. Balance clarity against being too woodland products hub to be. The Estate accepts that somebusiness arrangement. The aim is to prescriptive. It’s critical to be clear businesses will fail, but through ourgenerate value by bringing together about what you are looking for, but you approach of encouraging a number ofcomplementary assets, skills and should remain open about how you different experimental enterprises, weaspirations from both parties. The might achieve your objectives. One of spread the risk and the failures are morestarting point for making this happen is the benefits of Land Partnerships is than compensated for by businessesto be very clear what your own assets, that, by clubbing together with another which are successful.”skills and aspirations are. By taking business, you may discover unexpectedstock before starting to look for a land solutions and opportunities. John Channonpartner you will be able to: Land Use Manager Thinking about riskn C  ommunicate what you have to offer, Attitudes to risk, and perceptions of so that you can attract the most risk, have a strong influence on decision compliance or breadth of the customer appropriate partners making. In general it is natural for us to base. Others will be external and less Questions you might ask yourself perceive activities we are familiar with controllable, such as input andn Draw up a focused set of search as being safer than things that are new. commodity costs, or the weather. Landowner Land Entrepreneur criteria so that you can select the But any business, whether long- Some will be difficult to gauge, such best land partner for you and established or an untried start-up, is as those from novel enterprises, Motivations Is this about building up a farm business, or Is this a stepping stone to something else, or your business exposed to risk. And in uncertain times young entrepreneurs or untested plans. scaling back your commitment? Are you looking do you want to settle down? Do you have a – as we face with land enterprise – But that doesn’t mean they are not for someone to develop a particular business precise vision for a type of farm or business?n I  dentify clear outcomes and taking a chance on the new might just worth taking. The Land Partnerships opportunity, or are you open to suggestions? Is this a way of life, a way to change the world, parameters against which to pay off against holding fast to an old approach encourages both parties to Is this part of a vision for the whole estate or a or just a way of making a living? Are you evaluate potential partnerships business model. examine their appetite for risk and to solution for one parcel of land? How hands-on aiming for independence, or do you want a plan for uncertainty proactively. The or hands-off do you want to be? close business partnership?The process of taking stock can be So it is important to make an development of new businesses willinstructive and revealing. Our key even-handed assessment of risk. Some introduce new risks; but the opportunity Assets What land, buildings, and equipment might What skills can you bring to the newrecommendations for getting the risks will be familiar – internal to the to diversify, integrate systems and you wish to make available? What other business? Do they just relate to farming, ormost out of it are to: business or capable of being managed, perhaps reduce off-farm inputs may business interests do you have which might do they include marketing, communication, such as the diversity of income, legal offset others. n complement a new one? What markets can retail or business development? Do you have1. Structure your thinking. We find it you give access to? What skills and experience equipment or livestock? How much capitaluseful to do this under three headings: might you be willing to offer? Is there any do you have access to? What’s your businessMotivations – what are you in this for? It’s critical to be clear about what you are looking for, infrastructure that you will need to develop or idea? Are there any skills or plans you need toAssets – what have you got to offer? upgrade before you can offer up land? develop before seeking a land partnership?Requirements – what do you need? but you should remain open about how you might achieve your objectives. One of the benefits of Land Requirements Do you need the new business to provide a Does this have to provide you with a living2. Take time. Avoid simply plumping particular service (straw, muck, energy…)? wage? Do you need a house? How muchfor the most obvious answers and Partnerships is that, by clubbing together with another Is there a financial benchmark you need to land/property do you need to start? Howconclusions. The process of reviewingyour business situation might spark off business, you may discover unexpected solutions match? What absolute red lines do you have? For example, these might relate to contractual much might you need further down the line? What infrastructure will you need? Are younew ideas and perspectives. and opportunities. commitments, grant or tax pitfalls (see Legal absolutely fixed on one business idea? briefing on p17), or personal preferences.06 07
  • The Land Partnerships Handbook Online matchmaking Making connections in person is a good way of creating a credible first impression, but the farming community is making more and more use of online forums, discussions and classified ads forStep 2: Finding making business connections. Landshare.net has developed an online matchmaking service for © Ernest Cook Trust (www.ernestcooktrust.org.uk)/Alexander Caminada people with land, and peoplethe right match seeking land, to connect. Matches span every scale from garden veg patches to fully fledged smallholdings, and now increasing numbers of people are using it toThe right mix of land, people, skills and identify business opportunities for larger scale production such as:aspirations forms the foundation of any n  onverting surplus land into a C supply chain for local restaurantsland enterprise arrangement. n  ffering shares in the farm O business to the local communityT n  etting up a new livestock S he aim of this step, for both Examples might include firms of rural Land Manager, Oliver business Dallyn, with tenant farmer, the landowner and the aspiring surveyors, agricultural colleges, or Roger Giles-Austin of Calley land entrepreneur, is to make organisations such as Fresh Start. Farm on the Ernest Cook CASE STUDY the most of their chances of Trust’s Hartwell Estate inattracting the best and most compatibleland partner. For both parties this means n The Land Partnerships website www.LandPartnerships.org gives Buckinghamshire. HerePigPigpresenting your skills and assets in the links to online sources of contacts Lee, Jason and John of HerePigPigbest light and to the right sort of people; and information. n Meet, at least once. The need for  typical, successful Land Partnerships about the timing that is especially good, met online, discussing a sharedunderstanding what others might the land entrepreneur to come out arrangement. or perhaps not so good? passion for pigs. Within a year theybe looking for and, ultimately, making a 2. Choosing to the land to meet the landowner is had found a willing landownergood choice about who to work with. In Ideally both landowners and land obvious. We also find that visits in n Use a checklist and think through n Be clear about your needs and goals to rent them some land andpractical terms this involves two things: entrepreneurs will be in a position to return by the landowner, in the other these areas: and avoid wishful thinking. If you have established a four-acre piggery. compare several options before making direction, can create revealing and Practicalities – could it work? a nagging concern, flush it out and They now rear an ever-growing1. Putting the word out a choice. Our advice is to be both different conversations. They also help Personalities – will you get on? address it now. Whatever the range of rare breeds which theyThis is something to be strategic about. methodical and to use your instincts: emphasise the two-way nature of a Circumstances – is there something outcome, it’s better to know. n have started to sell through theirAdvertising can be an expensive Own a Pig scheme.business and it is important tobalance the need to get exposure to Top 10 things that landowners are looking for Top 10 things that land entrepreneurs are looking forlots of people against selectively gettingin touch with the best people, with the 1.  ealistic business ideas – the landowner has a financial interest in the R 1.  he right infrastructure – the basics; can they physically run their business Tbest credentials. The first and potentially business doing well, so drive and enthusiasm has to be backed up with a from the property?most effective avenues are likely to be: robust business case 2.  ccess to markets – is there passing trade? Are there established routes to A 2. Professionalism – they need to be confident that compliance issues, market? Promising leads or favourable local demographics?n Personal and professional networks. contractual commitments and day-to-day business will be managed as a 3.  fair deal – they might be betting their future on this, so a solid and A It’s quite likely that you, a colleague or matter of course and without fuss transparent deal will be important; more attractive than a bargain with the a local agent know someone, or know 3. Commitment – they want good people who will stick around; because risk of insecurity or unexpected costs someone who knows someone. This it’s essential for continuity, and because a high turnover of tenants is 4.  pace to develop – in terms of physical space, business growth and scope S approach can give you access to expensive, time consuming and risky – will they have the freedom to adapt and grow as they go along? “We’re delighted to see new farm recommendations and intelligence at 4.  ractical proficiency – is critical for the day-to-day running of any P 5.  pportunities for collaboration – it may be marketing, logistics, ma- O businesses emerging through our little cost. But unless it generates some land-based business and will be seen as an asset to have around chinery. The existence of complementary enterprises, open to working land listings service. By working with attractive options, it makes sense to 5.  rive and confidence – to see the plan through D together, can be attractive to a start-up which has yet to build up its capacity Land Partnerships to help create open up the field and shop around: 6.  positive mind-set – making a living from the land can be hard and even A 6. Stability – they will need to put their all into their new business, so they even more successful matches, the best business relationships have frustrations, so finding people who need to feel confident that circumstances are fairly stable we look forward to seeing moren The press. This would most likely are upbeat has real value 7. Experience – some will value the advice and perspectives of an people finding new ways into food involve a small-ad in the farming press 7.  sound financial position - they need to be confident that start-up costs A experienced farmer or other established businesses production and keeping livestock.” or in a local newspaper. Alternatively, can be met, and that the business has the creditworthiness to invest and 8. Encouragement – this support is especially welcome if it is both optimistic Land Partnership opportunities can and grow. Evidence of access to capital will look good and emboldening Hugh Fearnley-Whittingstall, have been promoted to the media as 8.  lear communication – is important in all working relationships C 9.  can-do approach to problem-solving – problems are bound to arise and A Landshare.net news stories in themselves. 9.  hared values – land goes deep and while the new enterprise needn’t be S many day-to-day issues are impossible to legislate for. The practical exactly what the landowner would do, it should at least fit with their ethos capacity to react, solve, move on is priceless Access the matchmaking servicen Brokers. There is a wide range of 10.  omebody they get on with – farm communities often involve working S 10.  larity and consistency – is important to both parties. It saves time and C at the Land Partnerships website professional and voluntary organisations and living in close proximity. Finding people who fit in is of real value. builds trust. www.LandPartnerships.org who may know of potential partners.08 09
  • The Land Partnerships Handbook The Land Partnerships Handbook Landowners’ interests might include n I  ncome generation n G  etting buildings used and maintained n  upporting the local community S n  ncouraging young business talent EStep 3: Creating a n  aintaining/enhancing their reputation M n  uilding support for future development B n  reation of complementary enterprises C n  dding value to existing enterprises Abalanced agreement n  emonstrating good practice D n  nhancing the environment E n  educing their carbon footprint R n  ncreasing local business resilience IOnce landowners and entrepreneurs have found each Entrepreneurs’ interests might includeother they need to define a relationship that will last. n M  aking a livingA n R  ealising a dream new land enterprise involves and is a crucial step towards building trust resentments and be prone to disputes n  emaining in a locality R a significant – and largely and developing the insight needed to form or early breakdown. It is fine for both n  ursuing a passion P irretrievable – investment of strong relationships. landowner and entrepreneur to hold on n  aking a brilliant business idea reality M time, energy, money and passionately to their interests but positive n  aking use of their specialist skills Mgoodwill. So the land entrepreneur will To enable creativity, at this stage it is relationships are about striking the right n  eveloping new business skills Dwant to avoid the prospect of uprooting important to keep options open and not balance and being open minded about the n  ontributing to their community Ctheir business, and the landowner will become too focussed on a particular best way to meet respective interests. n  ontinuing a family business Cwant to avoid having a high turnover of outcome or predetermined solutions. Enlightened professional advisers or n  stablishing a family enterprise for Elettings, empty properties or conflicts of The better the understanding of each agents working to a suitable brief can younger generationsinterest; all of which take up resources, other’s needs the more imaginative the facilitate the whole process. n  orking alongside complementary Wand can have an impact on local relations. exploration of ways to meet them. businesses In shaping the balance of the partnershipBy this stage both parties will have a This requires a transparent and flexible a key consideration will be the degree ofclear idea of their own interests and approach and a willingness to address risk each party feels able to take. This willobjectives. Now, a crucial ingredient of the issues and opportunities together, side vary from relationship to relationship andLand Partnerships approach is to develop by side rather than in opposition across a will depend on the experience, skills anda genuine understanding of, and respect negotiating table. To create really positive confidence of each party as well as theirfor, each other’s interests. This will help to relationships it is in both party’s interests personal motivations and resources.spot synergies and potential conflicts early to help solve the other’s problems and toon so they can be built on or managed look for mutual gains. Some things that Typically, tenancy agreements areconstructively as needed. It will also help might be of low cost to one might be of drawn up by the owner or their agentavoid misunderstandings that often result high value to the other. Identifying such and understandably tend to favour theirfrom preconceived ideas and ready-made opportunities can be liberating. particular interests. A Land Partnershipsassumptions. This is a two-way process approach encourages a more flexible Successful Land Partnerships use of agreements, tailoring contractual arrangements will not be founded on hard responsibilities to suit individual Considerations in bargaining or one party getting a good deal circumstances and the varying levels of defining the partnership at the other’s expense. One-sided control required by each party. n agreements will be weak, will harbour n W  hat land and buildings are involved? n  ow long does the agreement H “The most important aspect of the relationship need to be? between a landlord and tenant is that it works for both The Country, Land & Business Association (CLA), which represents n  ho provides capital? W n  hat services are available? W parties: this will involve trust, understanding, and a the landowners and managers responsible for around half of the rural ©National Trust Images/ Penny Tweedie n  hat help and support might W the business need? business arrangement that is mutually acceptable and land in England and Wales, welcomes this document as a valuable contribution n  ow much control does the H which will last. Obtaining the highest possible rent is to the debate. It provides sound advice on a fresh approach to what is, for many owner want to retain? n  hat is the basis of payment? W never the only factor, nor is it advisable to be too rigid; CLA members, a core part of their businesses. We agree that effort applied to n  ow should payments be H flexibility and sensible compromise are often the defining the parameters for a new venture is likely to be very worthwhile. If this reviewed? n  hat degree of risk is each W hallmarks of a truly successful arrangement.” handbook helps people secure a more diverse and sustainable future for their party prepared to take? Nicholas Ford Director and Agent for the Ernest Cook Trust land and those who earn their living from it, it will have been a big success.10 Oliver Harwood, Chief Rural Surveyor, CLA 11
  • The Land Partnerships Handbook The Land Partnerships HandbookStep 4: Selecting own separate business. Typically, the owner will provide the land, buildings and fixed equipment while the farmer 5 Conventional Farm Business Tenancies (FBTs) are the most common model for new lettings ofa legal framework provides labour, management expertise and mobile machinery and equipment. Where livestock are involved they may land. The owner is not directly involved in the farm business and simply offers land and/or buildings in return for an be shared, with both parties owning agreed rent. The rent is typically based an agreed proportion of each animal or on the market value of the holding andPracticalities and terms defined, it’s time When discussing legal frameworks, the clearer the brief, the more cost they may be provided entirely by one party. Input costs are shared in agreed is reviewed every three years. As such it does not reflect annual fluctuation ofto agree the right legal structure. effective the legal process will be. ©National Trust Images/Joe Cornish proportions and each party owns a pre-determined share of the produce. farm business returns, which means that the tenant can carry a high levelO of risk. FBTs are, however, much more nce the landowner and land save money: the clearer the brief, the in farming but don’t want to carry out somewhere between a traditional 4 Licences are routinely used flexible than their Agricultural Holdings entrepreneur have thoroughly more cost effective the legal process day-to-day operations. Typically the partnership and a company. While the to let grazing rights on a short-term, Act predecessors and landlord and defined their business will be – a view endorsed on page 17 farmer will run the business and make members of an LLP may effectively often seasonal, basis. Formal tenant have much greater freedom to relationship, they are in a by Blake Lapthorn in their legal briefing. key decisions but a contractor will carry operate as partners, many of the occupation of the land, for tax, single agree terms which suit their particularstrong position to start thinking about out the practical farming operations as administrative requirements of an farm payment and cross compliance relationship. There is great scope toappropriate legal frameworks with The spectrum of legal options agent for the farmer. The farmer cannot LLP mirror those for a company, for purposes, remains with the landowner. use FBTs imaginatively to replicate thewhich to formalise their agreement. Various types of legal agreement are seek a guaranteed income under such example, having to file accounts at Licences can be useful for the land benefits of other types of agreement in available, giving different degrees of an arrangement as, for tax purposes he/ Companies House. The attraction of entrepreneur, often as a supplement a more familiar form.In broad terms, the legal options control to the landowner and land she must be seen to be taking financial an LLP is that an individual partner’s to other land held under longer termexist along a spectrum of control: entrepreneur. At one extreme, the risk. They will also retain responsibility liability may be limited in a way that is agreements, for instance for grazing, 6 Long Term Lets. Owners who arefrom landowners retaining full control land would be farmed in-hand giving for legal and regulatory compliance. not the case in a traditional partnership. forage-making, or to harvest a specialist content to hand over a high degree ofat one end, to land entrepreneurs taking the owner total command over The relationship between partners may crop. For the landowner they can offer control of their land but do not wantprogressively more control towards management and business decisions, 2 Farming Partnerships can be used be regulated by a partner’s agreement, a means to graze pasture without to part with it completely can considerthe other end, as illustrated below. performing most of the farming to enable an owner to run a farming and between company shareholders by the need to run a livestock enterprise, long term lets. A FBT or a businessOne effective way of homing in on the operations directly and carrying the full operation with others where they are a shareholder’s agreement. or to introduce new rotational options letting could suit, depending on thesort of agreement that might work for financial risk. At the other, the owner all business partners. These are often into an arable system, such as type of property. nyou is to locate where you think the might sell the land, handing it over to used to involve family members and Other models that follow a corporate grass/clover leys.terms of your business relationship sit someone else. Between these two lie can be complex legally and in terms of or similar structure exist and a numberon this spectrum. a number of options that might suit taxation. They need to be very carefully of these are referred to under in our different circumstances: set up and managed to avoid problems examples overleaf. ”The TFA seeks to promote the landlord/tenantIf you can get this far before briefing on the death or retirement of a partner.your lawyers, then you are more likely 1 Contract Farming is a model often 3 Share Farming is a way of system in agriculture but it is absolutely right thatto get a legal framework which serves used by owners or agricultural tenants A limited liability partnership (LLP) is enabling two parties to farm the same landowners and entrepreneurs engage to ensure thatyour purposes. You are also likely to who want to retain their involvement an alternative legal entity that sits land jointly with each running their the legal arrangements they use to cement their ongoing relationships are in keeping with their sharedThe spectrum of legal options available for farm-based Land Partnerships arrangedaccording to the apportionment of control between the landowner and land entrepreneur vision and objectives. Falling into the wrong type of legal structure for the wrong reasons will always be Greater Greater control control to the Contract Partnerships Share Licences Conventional Long to the land a recipe for frustration, conflict and failure. When landowner farming farming tenancies term lets entrepreneur drafting a Farm Business Tenancy, for example, it is tempting for the professionals to leap towards a 1 2 3 4 5 6 Land is Freehold farmed is sold standard format when a bespoke agreement based on in-hand on a thoroughly thought through Heads of Terms would be The landowner exercises full The farm business is run Arrangements where separate The parties remain as separate The landowner retains close The main use for Farm Business A form of lease usually achieved A complete disposal of more appropriate. This handbook provides the parties management by the landowner, parties come businesses, but control of Tenancies. Though through a FBT or interests, though with a good framework to assess the options available control but practical together to operate collaborate the land, with FBTs offer a wide business letting, convenants can be operations are a single business operationally specific rights range of levels of but with longer applied to restrict to achieve sustainable outcomes.” contracted out being granted engagement terms future use on licence George Dunn Chief Executive, Tenant Farmers Association12 13
  • The Land Partnerships Handbook CASE STUDY FutureFarms is a cooperative set up in 2004 to grow food within the parish of Martin, in Hampshire, for sale to the residents. It is non-profit making with all proceeds being used to fund production and build up the business. There are around 100 members,Example 1: who either pay a small annual subscription o r provide seven hours of labour per year, and six part-time employees.Communities as Land Entrepreneurs The cooperative is a limited company with eight directors who meet monthly. Pork, lamb, chicken, eggs and vegetables are produced on two sites, totalling ten acres, rented under FarmL Business Tenancies. andowners with an interest This may be because they have formed their part in these sorts of social Founder, Nick Snelgar, says: “We were in making links with local some type of partnership, that the enterprises. These include: concerned about the distance food travels from communities, and communities producer is also the landowner, or in- farm to plate and the disconnect between who wish to organise themselves deed that the community has the n Community Interest Companies  producers and consumers. We aim to produceto produce food or other things from the resources to buy land for itself to A form of limited company designed food that is tasty and wholesome. It is grownland, now have a number of options to operate a business. for social enterprise. They provide the in the parish in a way that is in harmony withhelp them work together. benefit of a business, such as having nature and respectful of animal welfare.” A common element in all these paid directors, but must have a clearly Nick has now established Maplefield Milk,Three components need to come arrangements, in addition to any Land stated public purpose to which all a Community Interest Company, which istogether to make this sort of Partnerships mechanism, is that a assets and returns must be devoted. setting up a micro-dairy to produce and processcollaboration happen: land, production, direct relationship is formed between a milk for delivery within a ten-mile radius. Theand community. And, in broad terms, farm and the people who consume its n Industrial and Provident Societies  system will involve a mobile bale, milking upthere are three ways in which this produce. These types of arrangements Appropriate for bona fide cooperatives to 20 cows and will aim to graze local sites,can happen: are often referred to as being forms of that conduct business for the mutual integrating with other farmers’ arable rotations. Community Supported Agriculture (CSA). benefit of their members – all of whom Nick says: ”There is potential for this nomadic1. A community-led approach where a hold equal shares and voting rights. approach to provide benefits to local arablecommunity organises itself to start a There are many different models of They can also be used for wider farmers. We just need the right types ofland enterprise. It enters into an CSA and the degree of community community benefit where there is a agreement to make it happen.”agreement directly with a landowner, involvement can vary greatly. Some special reason not to be a company.in much the same way as any other simply mean that customers pay a FutureFarms and Maplefield Milkland entrepreneur would. subscription in return for a share of the n Charitable Incorporated  Hampshire produce; others provide a stake in the Organisations2. A producer-led approach where a business, giving members a say in This is a new legal structure thatfarmer or grower initiates a relationship management decisions such as what enables the set up of a charity butwith a community, who invest in the crops should be grown. retaining some of the benefits of beingbusiness or benefit from a share of the a company – such as limited liabilityharvest. In this case, the producer may In all of these, as with other Land for trustees. They only have to registeroperate through some form of Land Partnerships, the landowner can choose with the Charities Commission, notPartnerships arrangement to obtain land. to be anything from an integral part with Companies House. of the enterprise, through to being a3. Arrangements where the landowner, straightforward ‘enabler’ – renting land Links to further information on CSAproducer and community act together. out to the CSA. schemes and social enterprise models are on the Land Partnerships website Legal structures www.LandPartnerhips.org Benefits of community There are several legal options which supported enterprises are particularly well-suited to situations can include where communities wish to formalise n Guaranteed or loyal markets  for produce ”We need creative and skilled people in farming and n Local interest, involvement  we need to help them gain access to land so that ©National Trust Images/Paul Harris and support n Improved cash flow through  they can develop diverse enterprises. The Land up-front payments or community investment Partnerships approach clearly spells out how we can Landowners can n Voluntary labour n Potential involvement of the  do this in practice and the benefits that these benefit from a community’s landowner as a trustee or relationships can offer to both parties.” interest in local, board member sustainably Helen Browning OBE Chief Executive, Soil Association produced food.14 15
  • The Land Partnerships Handbook CASE STUDYExample 2: New partnerships to meet newchallenges on the Clinton Devon Estate Legal briefingC linton Devon Estates believes and the bank. We believe it is time for a while meeting appropriate regulation and that to encourage new entrants new and pragmatic model. The Estate compliance. The CCA model does not and innovation into the farming is working on developing ‘cooperative try to unpick existing legislation such and land management sector contracting arrangements’ (CCA). as the 1986 Agricultural Holdings Act. I would strongly recommend thewe will have to explore new models of These provide a bespoke third party It retains and enhances the tax position Land Partnerships approach. It is ancollaboration and partnerships. In the business opportunity for tenants and in return for a long term commitment. effective way to build a strong andnext decade land management will be landlord to let farms collaboratively. Most importantly, it encourages a enduring relationship betweenat the centre of a debate about demand Both tenants and landlord could share platform for a new breed of farm landowner and entrepreneur. It alignsfor food, competing with demand for in the business arrangement through and land manager to emerge. the objectives of both parties and shouldfuel, carbon management, development Special Purpose, Joint Venture or reduce expenditure on professionaland human health. Existing tenancy and Limited Liability Companies. This timely handbook provides the advisers’ fees because:ownership structures will need to adapt Agreements may be for ten or more stimulus for new ways of thinkingif there is to be a common purpose years with clear exit strategies for all and aligns well with our own approach n T  he terms and conditions are clear andbetween those who own land and those parties. Costs should be reduced and to developing innovative new models agreed at the outset thereby reducingwho manage it. capital investment focussed on overall of managing land and property. That is, the time and cost of documenting the business outcomes, not a specific land bringing together those with assets, arrangementsClinton Devon Estates fully supports the holding or tenancy. skills and capital to find entrepreneurialguidance and advice presented in this ways of working to make a genuine n T  he potential for future dispute shouldhandbook. Different approaches and We believe that a CCA recognises the difference. be reduceddifferent mindsets will be needed and need for scale and productive capital inthis handbook begins to tackle this head order to be successful in tomorrow’s John Varley The landowner and entrepreneur should,on. There needs to be a stimulus for market; delivering operational Estates Director however, sense check the proposedinvestment from the landowner, tenant efficiencies and supply chain leverage Clinton Devon Estates arrangements with their professional advisers before finalising the agreement. Points to look out for include: Share farmer, Rob Nancekivell, shows n A  gricultural Property Relief (and CDE management Business Property Relief) can provide accountant, Andrew significant Inheritance Tax savings n Even if there are no plans to make  into contractual arrangements. Any de Gruchy, the grain to landowners. A landowner should physical changes to the land or agreement reached by both landowner from the dry grain check that the proposed arrangement buildings planning permission may still and entrepreneur may be subject to store on the Clinton Devon Estate – will not prejudice his or her estate be required. The land entrepreneur’s rights and obligations imposed by law. which was a receiving such tax relief. If it will, new business could, in itself, constitute This is particularly true for tenancies. joint investment. can the agreement be structured so a change of use in the eyes of the that it does not? Planning Authority. Using the Land Partnerships approach coupled with a professional sense n I  t is important to have a clear n If the land is subject to an  check should ensure that both understanding of whether the land agri-environment scheme the landowner and entrepreneur arrive ©National Trust Images/NTPL/Stephen Robson entrepreneur’s proposed use of the landowner will need to make sure that at an arrangement with a solid foundation land/buildings qualifies as an agricultural the requirements are not breached by and which meets their aspirations. It ©National Trust Images/Stephen Robson use from a legal and planning the intended use. Criteria necessary to is well worth spending time and energy perspective. The law’s definition of maintain any ongoing payments on the first three steps of this handbook, what constitutes agriculture is not the will also need to be met. Penalties as this should result in both landowner same in every context. Whether the for non-compliance can include and entrepreneur using professional proposed activity is deemed to reduction or loss of future annual advisory time most cost effectively. be agricultural or not can make a big payments or possibly the repayment difference for taxation and Town and of money already received. Country Planning purposes. It will also Mark Charter influence the most appropriate form of n Be aware that statutory requirements  Partner and Head of Farms and Estates tenancy agreement to be used. often import rights and obligations Team, Blake Lapthorn 17
  • The Land Partnerships Handbook The Land Partnerships HandbookStep 5: CASE STUDY with Bill and Emma Yeats has al- lowed them to add table birds, eggs, lamb and pork. To make the farm asThinking long-term sustainable as possible they wanted to introduce vegetables into the rotation and agreed to rent 50 acres of land to a local organic grower. A further twist is the community buyoutAllowing the partnership to adapt as of the horticulture enterprise which is now owned by 400 shareholdersthe business evolves. and is called the Community Farm. Produce from the farms isA marketed through a brand Jim dopting a Land Partnerships n An open and frank relationship that and Luke created called The Story, approach based on trust, builds and maintains trust with routes to market that include a openness and a balanced n Common objectives – understanding farm shop, box scheme, wholesale agreement that genuinely and respecting each other’s interests business and catering at events,respects both parties’ interests will n Regular dialogue and review – not just Business synergies: even at Glastonbury. Luke explains: “We simply wanted to be able toimmediately multiply the chances ofsuccess. But rural business operates in at rent reviews n Flexibility – being open to new ideas The Story engage with our customers directly,a dynamic environment – markets for n Willingness to learn from experience Landowners, Jim Twine and Luke offering them great tasting productsproducts and services come and go, n Recognising and valuing Hasell, have created not just a that we are proud of. In short, foodstandards and consumer expectations interdependence – sharing problems partnership between themselves with a story.”change, technology moves on, experience by running their two farms as one The partnerships are not limitedgrows and new skills are developed. All Building a cluster unit, but have also developed a to farming. Luke has developed aof this means that if the business and the of enterprises number of other enterprises on their company which hosts weddings,Land Partnerships arrangement are to be Land Partnership arrangements will land by working with local farmers corporate and other events, and iseffective in the long term they have to often be a one-off deal, for a single and growers. another outlet for the farms’ produce.be light footed and prepared to adapt plot on part or the whole of a land The two farms were already selling All the businesses are interconnected,and change so that they can absorb holding. But they can also be used organic beef and wanted to offer a benefiting from shared labour,pressures and grasp new opportunities. progressively to build a community wider range of products but lacked infrastructure… and a shoulder to cry of land enterprises. This can be a the time and expertise. A partnership on when things go wrong!Above all, it is vital to maintain goodwill in significant shift in business model ©National Trust Images/Arnhel de Serrathe relationship and to recognise the value and can bring a number of benefits:of this in financial negotiations. All toomany landlord and tenant relationships n For the landowner it diversifies income the right combination of enterprises, and need, and what they might provide.start off well, with optimism and good streams and builds financial resilience getting them to work well together. Select and locate them accordingly.intentions, only to falter at the rent review. by spreading the risk of failure andGetting the right balance of reward is income fluctuations across a number In our experience the following n Selection criterianever easy but it is critical to the success of enterprises and business types ingredients can be invaluable: Use them to test proposals to ensureof the relationship. The contribution of both they complement existing businessesparties must be understood and properly n For all parties it has the potential n Consultationrecognised. This does not just mean the to extend networks and open up Make sure that existing or incoming n Collaborationsfinancial contribution; it also has to take new markets businesses are aware of your intention Interactions between businesses willproper account of the skills, physical effort by forming marketing syndicates and work well will require them to take an to build a cluster of enterprises; it may happen by simple virtue of proximityand emotional contributions that are so n It creates opportunities for collaboration the development of shared brands. active and strategic approach. In well be an attractive prospect but a regular forum for proposing andimportant to making the business work. through internal markets for materials, particular they will need to take care of discussing ideas for businesses to work labour and waste products. Or practical Making it work two key functions: firstly, providing an n System analysis together can help ensure opportunitiesSome of the important things that help cooperation such as sharing machinery Developing a cluster of enterprises is efficient infrastructure, both practical and Think about how enterprises might fit are not missed. nmake the relationship last will include: or the cost of certification schemes; or the landowner’s prerogative. To make it administrative; and, secondly, selecting together in the future; what they will Find out more n Further sources of information and advice on Land Partnerships n Links to all the organisations and projects mentioned in the Handbook Please visit www.LandPartnerships.org for: n PDF downloads of this handbook18 19
  • The Land Partnerships Handbook provides a structured process, to help landowners andland entrepreneurs work together to establish innovative and lasting land enterprises.“In my capacity as Chairman of the Tenancy Reform Industry Group, which isresponsible for advising the Government on issues relating to the tenanted sector, I haveno hesitation in endorsing this handbook. The publication provides arefreshing approach to the subject and sound guidance to those who own land they wishto let and the prospective tenants who have the skills to manage the assets concerned.By following the advice on offer parties should be able to come together and form asound, long-term working relationship. There are a wide range of issues to address when starting any such relationship andthe step-by-step guide in each section of the handbook will doubtless prove to be ex-tremely helpful. With the benefit of this initial guidance those who wishto take proposals forward will be in a much better position to seek professional advice,secure funding and establish a solid business proposal. The handbook should be read by new and old hands alike. In the world of letting landthis refreshing approach can, I believe, lead to many opportunities as we seek to feed theworld and to continue managing our countryside.”Julian Sayers FRICS FAAVDirector, Adkin Chartered Surveyors www.LandPartnerships.org ©National Trust Images/Joe Cornish